Unfortunately, understanding the nitty gritty of workers’ compensation programs can be incredibly challenging, especially for businesses in California a state known for its highly fragmented workers’ compensation system. The increasing number of fraudulent claims and exorbitant litigation expenses contribute to the burden. Although a worker injured in California doesn’t receive any more benefits than a worker in neighboring states like Arizona, Nevada, or Oregon, the cost for the employer to buy the insurance in California is 300-500 percent higher. For instance, the manual rate for workers’ compensation class code 6504, which applies to food manufacturing businesses, is around 14 percent of payroll in California. In contrast, it is only about 3 percent in Arizona, Nevada, or Oregon with the same insurer. Even if a claim is denied by the insurance company, employers will still likely see an increase in their monthly premiums at some point due to California’s Workers’ Compensation Appeals Board (WCAB) which allows denied claims to stay open for years. Moreover, there are counties in California where the litigation rates are as high as 40 to 50 percent of lost-time claims that are filed by workers.
Samuel Hale to the Rescue!
Samuel Hale delivers an exclusive and cost-effective workers’ compensation program with alternative dispute resolution (ADR). ADR helps California businesses secure significant savings on monthly workers’ compensation premiums by resolving disputes quickly outside of the traditional legal system, enabling injured employees quicker access to their benefits, allowing them to get healthy and back to work fast. ADR programs are designed to ensure expeditious and equitable settlements between injured workers and their employers and provide them with tangible benefits that cannot be delivered by traditional methods involving court systems. “Samuel Hale was founded to defy the unfairness of the California workers’ compensation system,” says Michael DiManno, CEO and Founder of Samuel Hale.
The Beginning Chapters
The California Labor Code has a certain provision that allows businesses to settle disputes by using an ADR program instead of litigating them at the WCAB, thereby making it easy to combat fraud. However, to date, only a select few companies (mostly municipal and the Fortune 500 companies) are authorized to leverage ADR as it is not only difficult to qualify for the approval, but it also requires a company to have a long-term perspective on workers’ compensation costs. Realizing that ADR allows employers to achieve massive cost savings, DiManno and his team decided to pursue this code and build a company around it—that was the idea that led to the inception of Samuel Hale. “The Department of Workers’ Compensation has empowered us with a Kevlar vest against unnecessary litigation, and we share it with our clients through a ‘co-employment’ business solution,” says DiManno.
The high cost of litigation and the friction it causes are the primary reasons why California is considered the most expensive state for workers’ compensation insurance coverage. Eliminating that “litigation venue” by using ADR was the founding principle of Samuel Hale. Samuel Hale provides robust protection against excessive litigation on employment practice liabilities. “We are more like a bionic company we took the best options in the marketplace for managing labor costs and engineered the company to optimize what was already available,” shares DiManno.
By creating an environment that reduces red tape and allows for open communication, we get to the resolution in less than half the time which saves money for everyone
A Unique Blend of Workers’ Compensation and HR Administration
Samuel Hale primarily serves light industrial businesses and employers with a high frequency of litigated claims or employee turnover that can result in post-termination workers’ compensation claims. “Most of our customers come through insurance brokers and other trusted advisors when they run out of answers to effectively control their claims, leading to a high experience modifier (XMOD),” informs DiManno. To this end, Samuel Hale has developed a product called “The Patriot” for employers with 10 to 5000 employees, which also includes a state of the art payroll and HRIS platform through its partnership with Paylocity, free 401k through The Equitable, fully compliant ACA healthcare plans, and access to a team of safety specialists, HR professionals, account managers, and more.
The solution is designed to streamline the claims process, reduce high XMODs, and deliver enormous savings on workers’ compensation coverage. It is designed to be an easy, predictable, and low-stress business transaction. “After clients sign up with us, workers’ compensation, which was once a strategic challenge to them, becomes as simple as buying copy paper from Staples,” quips DiManno.
A percentage of the savings on fraud claims provides a robust set of benefits. Samuel Hale employees become members of a trade association agreement called The PACT, which provides them with incredible benefits, including a complimentary Minimum Essential Coverage (MEC), access to major medical healthcare options, voluntary benefits, and an accidental death and dismemberment (AD&D) insurance plan. In addition, Samuel Hale makes contributions into The PACT Pension Plan, which helps to deliver a better financial future for the PACT members, who become fully vested in the pension after two years of employment with any of Samuel Hale’s customers. The pension plan acts as an excellent recruitment and retention tool for employers.
ADR streamlines claims resolution and delivers better claim outcomes as opposed to traditional disputes adjudicated at the WCAB. That means injured employees obtain their settlements faster without having to share their money with attorneys, the way no-fault insurance is supposed to work. Typically, when an insurance carrier gets a letter from the attorney, it goes to the WCAB, which is known for slow, inconsistent rulings. The WCAB is its own justice system and, unlike other courts, does not answer to a higher court. Samuel Hale’s advantage is its ability to avoid the red tape of the WCAB. As the WCAB has no jurisdiction over Samuel Hale’s workers’ compensation disputes, cases are transferred to a different court system headed by an ombudsman.
Samuel Hale contracts with American Ombudsman Enterprises run by The Honorable Dick Robyn, a retired worker’s compensation judge with over 20 years of experience on the bench and one of the authors of the original Carveout legislation back in 1993. The ombudsman calls every injured employee and explains the program. At any point, any of the parties (insurer, employee, or the employer) can proceed to the stage of mediation and eventually binding arbitration if the ombudsman is unable to resolve the dispute to their satisfaction.
In its five year exemplary performance history, Samuel Hale has had no cases subject to binding arbitration, and only a couple of them escalated to mediation. DiManno attributes this accomplishment to listening to their injured employees and providing them assistance with their claims, resulting in meticulous and quick dispute resolution. This allows everybody to voice their concerns openly with the goal of getting injured employees healthy and back to work as quickly as possible. This approach has provided phenomenal results, including an increase in employee satisfaction rates while achieving enormous cost savings. “California employers currently spend over 50 percent of the claims dollars on frictional costs while attempting to resolve disputes at the WCAB. By creating an environment that reduces red tape and allows for open communication, we get to the resolution in less than half the time which saves money for everyone,” remarks DiManno.
the department of workers’ compensation has empowered us with a kevlar vest against unnecessary litigation, and we share it with our clients through a 'co-employment' business solution
A Case Study
The success of a Samuel Hale client in the landscaping and property maintenance business perfectly demonstrates the incredible benefits of being a Samuel Hale customer. The client had incurred substantial losses leading to an XMOD of over 300 and was on the verge of going out of business due to substantial increases in their workers’ compensation premiums. Samuel Hale stepped in and turned things around for the client by stopping the runaway fraud, creating long-term stability, and reducing the expense without increasing their costs. Within two years, instead of closing its doors, the client was able to double their size through acquisition using employment costs as an arbitrage.
Steadfast Commitment to Excellence
Backed by a team of experts in technology, insurance, and employment, Samuel Hale manages a total of over 10,000 employees today. The company has developed a sound culture adhering to the principles of hard work, pursuing the truth, and doing the right thing. In fact, Samuel Hale was one of the fastest-growing companies in last year’s Inc. 5000 list, with a whopping growth rate of 391 percent.
Steering ahead, Samuel Hale is finding new ways to expand by embedding into other products and resellers. Innovating unconventional sales distribution models to expand its reach fits perfectly into the Samuel Hale style of doing business. DiManno explains, “Instead of selling to one bakery, we are finding Private Equity companies that might own 10 of them, making one sale vs. 10 separate sales.”
Perhaps Samuel Hale’s biggest opportunity lies in the growing contingent labor market, including light industrial staffing, as well as gig workers. The company is also building community recruiting centers, The PACT, to help centralize the onboarding of employees, ensure they understand their member benefits, and provide free training in different fields that would allow workers to increase pay. Additionally, the company is planning to include a medical facility in the recruiting center so that employees who are members of The PACT can not only get treated for work-related injuries but also use it for primary care at no copay.